Overview

Air France-KLM is an airline company that was originally two separate companies that merged in 2004 (Air France – French & KLM – Dutch) with its head office in France at the grounds of Charles de Gualle Airport.

Air France-KLM was recorded as the world’s largest airline company in 2008 in terms of revenue and passenger-kilometers. In 2013 the company transported 78,448 million passengers and has about 100,000 employees.

Unfortunately the last 6 years for the company have been rough with the company recording losses each year. According to The Financial Times Air France-KLM is stuck with its high cost base and has had to contend with big fuel bills and fierce competition from low-cost carriers.

The CEO Alexandre de Juniac is on a mission to rebuild the struggling company and has been applauded for his effort to double the share price within the short time of being CEO and has accelerated a three-year restructuring plan (Transform 2015 ). 

Air France-KLM CEO, Alexandre de Juniac

Debt reduction strategy 

Transform 2015 is Air France-KLM's ‘transformation plan’ put in place with the aim to reduce the company’s debt by €2 billion over three years. (2012-2015).

Air France-KLM's biggest expense is its staff, spending about a third of its revenue on employees. In November 2012, a voluntary departure plan for around 3,000 people was launched, also planning to reduce their costs by cutting temporary employment. 

The Group also launched a series of action plans where the heavily-loss-making short and medium-haul operations were restructured. In addition to the downsizing of the medium-haul and regional fleets and an improvement in staff productivity, the airline reorganised this activity around three complementary business units with a new pricing strategy.

 (Above information captured from the 2012 Annual Report)

Also noted from the 2012 Annual report, the Board of Directors almost halved their fees to align with Transform 2015.

Air France-KLM Board of Directors